The right approach to generating ideas from your employees creates a virtuous circle, say Alan G. Robinson and Dean M. Schroeder, professors at the University of Massachusetts Amherst and Valparaiso University (Valparaiso, Ind.), respectively.
Workers become more engaged when they see their ideas being used. And managers, seeing the impact of employees' ideas, give employees more authority -- which leads to more and better ideas.
How can you create such a win-win situation? Learn to appreciate the power of small ideas, says Robinson, and throw out any beliefs about the need for financial incentives.
What's wrong with the typical approach to idea generation?
Ever since Frederick Taylor argued that management's job was to think and the worker's job to do, this has been most companies' default perspective. But, in fact, frontline workers have better knowledge of the particularities of products, services, and processes than managers do. They're better positioned to spot problems and opportunities.
What are some of the characteristics of an effective idea system?
Ideas are actively encouraged -- from all quarters. Submitting ideas is simple, and the evaluation of suggestions is quick and effective. Pushing decision making down to the front lines for as many ideas as possible leads to better decisions, faster implementation, and lower processing costs; it also frees up managers' time.
Why the emphasis on small ideas?
Business leaders are always looking for the next breakthrough idea -- the home run that will put them well ahead of the competition with one swing. Because of this, the systems and policies they put in place are aimed at big ideas. Few managers realize how severely limiting this is. In many important aspects of business -- customer service, responsiveness, quality, and managing costs -- you just can't achieve excellence without getting the little things right.
What's more, most small ideas stay proprietary, whereas big ones don't. Big ideas are very visible to your competitors and are often countered or copied relatively easily. Because there's no natural way for competitors to find out about them, small ideas can add up to a huge competitive advantage.
Do organizations need to reward ideas to guarantee a large flow of them?
Not as much as they think they do. ... Besides, many seemingly commonsense reward plans -- for instance, offering a percentage of the savings or profits from each idea -- turn out to be counterproductive, creating an enormous amount of non-value-adding work and also undermining teamwork and trust.
Most employees have lots of ideas and would be thrilled to see them used. They take pride in contributing to the organization's success. So the most effective form of idea recognition is to implement the ideas rapidly and to give credit to the employees involved.
This article appeared in the June 2004 issue of
Harvard Management Update. Information on how to order a copy of the article is here.